For Walgreens, Acquisition Just What the Doctor Ordered
Walgreens will acquire New York-based drugstore chain Duane Reade for $1.075 billion in a transaction that includes all 257 Duane Reade stores located in the New York City metropolitan area, as well as the corporate office and two distribution centers.
“Duane Reade is a compelling strategic acquisition that will immediately provide Walgreens with a leading position in the largest drugstore market in the United States,” Walgreens’ president and chief executive officer Greg Wasson says. “In addition, Duane Reade’s recent initiatives in urban retailing, customer loyalty, and private brand products support and accelerate Walgreens strategy to enhance the customer experience in our network of more than 7,100 stores across the country,” Wasson comments. Duane Reade currently has the highest sales per square foot in the retail drugstore industry nationwide.
Duane Reade will continue to operate under its brand name after the acquisition, but decisions will be made over time as to the best, most effective way to harmonize the Walgreens and Duane Reade brands. Walgreens expects to retain Duane Reade’s store, pharmacy, and distribution center employees, and many members of Duane Reade’s senior management team.
Over the past two years, Duane Reade has embarked upon a significant brand transformation initiative that includes improvements such as dramatic new store designs with wide aisles and contemporary décor, lower pharmacy service counters for more personalized patient interaction, “Doctor on Premises” walk-in health care clinics, and a store-within-a-store beauty concept called “Look Boutique.”
Duane Reade’s transformation initiatives correspond to Walgreens’ current Customer Centric Retailing (CCR) initiative to reinvent the shopping experience. To date, CCR has been implemented in more than 600 Walgreens stores nationwide, with plans to have as many as 3,000 stores converted by the end of fall 2010.